7 Rentals in 3 Years by Breaking All the Real Estate Rules

Tony J. Robinson:
This is the BiggerPockets Podcast show 797, and I’m your host, David Greene. Wait, no.

Rob:
That was pretty good. I’ve got notes. Usually David goes, “Welcome to the BiggerPockets podcast show …” and then he does it. You didn’t do the finger, you got to do 797.

Tony J. Robinson:
Yeah, I’d do the hand.

Rob:
It’s okay.

Tony J. Robinson:
797. Yeah.

Rob:
So we’ll workshop it.

Tony J. Robinson:
Yeah.

Jenni Vega:
See if I had to do it over again, I would have probably just stuck to bigger luxury properties and probably less, maybe three to five luxury properties that would gross 100,000 a year. It should be quality, not quantity.

Tony J. Robinson:
Rob, thanks for having me, man. I’m excited to be here.

Rob:
Yeah, I am excited to always share the mic with you, especially when we’re talking about short term rentals and we are doing that today with our guest Jenni Vega, who’s absolutely crushing it. She’s crushing it in the world of unique stays and adding amenities and supercharging her revenue with these unique stays and also, buying cheap property and cheap homes and proving all the haters wrong that you actually can still make a lot of money on a $90,000 house. Wasn’t that crazy?

Tony J. Robinson:
Yeah. She also talked about how she bought a house for $400,000 that grossed about $100,000. So just a really amazing conversation with Jenni. I’m excited to get into it but Rob, I feel like maybe we should also just let people know who I am that I didn’t just hijack this podcast.

Rob:
That’s right. Yeah. Terrible, terrible host. I’m a terrible host.

Tony J. Robinson:
Yeah.

Rob:
And let me say I always get in trouble because people will come and talk to me and then my wife will stand there for 10 minutes and then they’ll leave. She’s like, “You’re horrible at introducing people.” I’m like, “I thought you knew them. I’m sorry, I forgot.” That’s just what happened right now. So tell us a little bit about yourself, Tony.

Tony J. Robinson:
Yeah, so my name is Tony J. Robinson. I am the co-host of the other BiggerPockets podcast, the Real Estate Rookie Podcast. And I’m stepping in today because like we said, we’re talking short term rentals and Rob and I are good buds and we love talking to all things Airbnb, especially when we can do it in front of the mic together. So I guess if you guys want to learn more about me, go over to the Real Estate Rookie podcast. If you guys wants to follow me on Instagram, it’s @tonyjrobinson, on YouTube or at the Real Estate Robinsons and yeah, I love talking all things real estate.

Rob:
Do you got any affiliate links you want to plug too, buddy? Dang.

Tony J. Robinson:
Yeah, man. Hey, if you want to sign up … No, I’m kidding.

Rob:
Well, yeah, so this is a good episode. What were some of your favorite parts?

Tony J. Robinson:
I talked about this a little bit at the end, but I think Jenni’s kind of got this fearlessness to her where she’s eager to just jump in and figure things out and I really love that part. And she also gives a little nugget at the end about listing optimization, and I wish we could have spent some more time on that, but we were so deep into the episode, we kind of breezed through it, but if you’re looking for ways to optimize your listing as a short term rental host, great topics on that. Then, just market selection in general, Rob. I think that’s one of the things that holds so many aspiring Airbnb investors back as their inability to select a market. And I think just between the three of us, you have a really good discussion on the framework you should be using when you’re making that decision.

Rob:
Yeah.

Tony J. Robinson:
So before we bring Jenni on, even if short-term rentals aren’t your thing, there’s a lot of discussion in this episode that just applies to real estate investing period. And you’ll pick up tactics and strategies and just a lot of mindset stuff too around being successful as a real estate investor.

Rob:
Love it, man. We got a lot to cover in today’s episode, but before we cover it, today’s quick, quick tip is next time you’re looking for a potential deal, see if it follows the Golden Triangle rule, and if you don’t know what the golden triangle is, then you’re going to want to listen to today’s episode because we talk all about how this rule can make you a lot of money on the short term rental game. A quick background about today’s guest, Jenni Vega. She owns seven units in six markets, acquired all of these in just the last three years, and part of her edge in the short-term rental market is unique stays, partnering and breaking the short term rental rules. With all of that said, Jenni Vega, welcome to the BiggerPockets podcast. How are you doing?

Jenni Vega:
Good, thanks for having me.

Rob:
Before we get into your backstory, what is the way that you would summarize your buying strategy?

Jenni Vega:
Part of my buying strategy has been to go into some markets that most short-term rental investors would never consider, and also buying less expensive properties than a lot of other investors would look at and also, diversifying a lot of investors by most of their properties in one area. We’ve actually spread out a little bit further.

Rob:
Yeah, okay, and how has that been assembling your teams? Do you have a bunch of different teams and all of your different properties, or do you have one big overarching umbrella that sort of runs everything for you?

Jenni Vega:
So every area has a different team and that actually hasn’t been very bad. We’ve organically found our teams through word of mouth, Facebook groups. That process has been pretty seamless. And as far as the markets that we’ve chose, every market has a totally different story. Right now, now that we have seven, I’ve gone really deep into Facebook groups and mastermind groups and it’s funny because now, I hear more and more buy in vacation markets, buy in vacation markets, but we didn’t know anything three or four years ago when we started, and because we didn’t know anything, we bought our first two rentals in totally non-traditional markets that if we knew better, we probably wouldn’t have.
So sometimes I think if you go off your gut, it serves you well. And knowing what we know now, maybe we wouldn’t have purchased those, but those first two purchases actually served us really well. And I think there’s different strategies for different reasons. Our first purchase was actually in a Midwest city that I grew up near Milwaukee, Wisconsin, which is certainly not a tourist market by any means, but it’s done really well for us and it was very inexpensive and at the time, we couldn’t really afford very much and it’s done well. It’s cash on, cash return has done well and going back I would’ve done it again. And I think the Midwest in general is a market that you don’t hear about much in short term rental land. It’s not very sexy and there’s nothing special about Milwaukee.
You could insert Columbus or St. Louis or Kansas City, and I think most of these bigger Midwest cities are really the same. The numbers are similar. So we bought our Milwaukee home for $160,000 at the very end of 2019 and now, it’s worth a little over 200 grand. So very affordable numbers and it’s crazy. I see a lot of my friends spend 700 grand on their first short term rental, these crazy numbers.

Tony J. Robinson:
Yeah or more people are spending seven figures, it’s insane. Jenni what I want to know, because I think it’s interesting and Rob, you’ve kind of gone with this kind of strategy also, all of our active short-term rentals right now are split between two different markets. And I have some friends who have 30, 40 units all in one city, and there’s economies of scale that you get when you, “Hey, we’ve built out our cleaning team. We’ve built out our rehab crew and our maintenance team,” and you can get really efficient with your operations when you stack multiple units into one market. There are some benefits I think that come along with kind of spreading things out. So what was your mindset? Why not go deep into this Milwaukee market if it worked so well for you initially? Why continue to spread yourself out?

Jenni Vega:
Yeah, so that actually was not a conscious decision. And I think it is smart to do the economies at scale. So we started in Milwaukee because we knew the area. At the time, we actually didn’t know for sure if we wanted to do a long term or a short term, and we wanted a market that can pivot to either, and it’s also a really good midterm market. So we like that rental because it has actually been a long-term during COVID. We actually might make it long-term again after the summer because it’s very old home and guests are actually very rough with it. Our handyman bills are pretty high, so that market could do both. Our second rental is in the middle of Oklahoma and we actually … to be honest, we bought that for the wrong reasons.
We’ve made so many mistakes and we still make a lot of mistakes in this journey, and we bought that one just because I went to college there, which to be honest is a really stupid reason to buy a rental. We bought that one the beginning of 2021. We pay $92,000, but the cash on cash return there is excellent. That one last year grossed $39,000 and it’s 2021 most investors were overpaying the situation in 2021. So we buy this in the middle of Oklahoma and we were short-term rental number three or four in this entire little city. And currently, there’s only I think nine or 10 of us of that. And there is not very much tourism in this city, and there’s actually not much numbers to prove either in this town.
So again, that’s totally another rule that was broken. Now we’re more savvy and if you’re going to buy a short term rental, you check your DNA and you check Rabbu and you do all these things. So we just went into it blind and we actually walked around stores and just little spots in the town, and I just actually walked up to people and I said, “Hey, what do you think about short-term rental in your town?”

Tony J. Robinson:
Man, you’re brave. That’s a brave question to ask, because-

Rob:
I hate them.

Tony J. Robinson:
Because you never know what response you’re going to get.

Jenni Vega:
Exactly.

Tony J. Robinson:
I don’t think it’s necessarily a bad thing. I think a lot of the markets that we’ve tried to move into, I’ve submitted offers all across the country and a lot of it is just relational, right? It’s like I have some kind of relationship to this market. So I don’t think it’s a bad starting spot, but you still want to be able to go back and validate that, okay, I have a connection here and now, let me make sure that it makes sense. Because Rob, how many markets are you in right now?

Rob:
Yes, that’s a lot. I want to say 10 or 12. Let’s see. Yep. Yeah, 10 or 12, something like that. I agree Tony. Honestly, Jenni, I don’t think it’s a bad idea at all, if you went to college there, I think that gives you an advantage. I mean obviously, there are so many ways that you can choose a market. I always say find something in your backyard. I like giving that advice for anyone that’s just getting started but I also like the idea of finding a market where you might have boots on the ground. So let’s say you have family in that city that might be able to help you or maybe can send packages to that family to hold while you’re setting it up.
I like finding markets that I have some familiarity with. You happen to know that city because you went to school there for roughly four years, I’m sure. I went to school in Austin and I’m a UT guy, so we might have some rivalries here. For me, I always loved the idea of investing in Austin because I knew that city like the back of my hand, even though I didn’t necessarily have any boots on the ground, all my friends moved away, I was just like, I know this city and I know what it could be. So I actually think it’s a pretty good strategy.

Jenni Vega:
Well, thank you.

Rob:
Jenni, tell us a little bit … paint us a picture of your life before you found real estate. Tell us about your job. What kind of income were you making, family, et cetera. Just give us the whole gamut here.

Jenni Vega:
Yeah, so actually my job is still pretty much the same. I know some investors, they quit their job and they ride on unicorns and everything after they find real estate. So I’m very fortunate, I have two great day jobs or day businesses. I’ve been with Cutco for many, many years, 21 years actually, and I sell closing gifts through that company to real estate agents, which actually is sort of indirectly how I found real estate investing. Then, I also published a magazine called Real Producers. And so my income do very well, a couple of hundred thousand a year and I’m still very active with both businesses. And I actually found real estate investing through a friend I met through my Cutco business. He wrote a national bestselling book called Hold, H-O-L-D and it’s a yellow book.
And what’s interesting is in my job selling, closing gifts to real estate agents, in a given week, I have conversations with maybe 10 to 20 realtors and I have for the past 13 years I want to say. So, in 2019, Steve Chader and Jennice Doty, my friends who wrote this book, they gave me this book and I read it. And the book is very easy and it’s a very simple to read and it’s all about just buying and holding real estate. It’s not about short-term rentals at all, it’s about just traditional buy and fold, long-term renting out a house. The premise of the book is that just through appreciation and tax savings, and even if you were just making a couple of hundred dollars a month renting out your house, that your average cash on cash return is about 28%.
So as I was reading this book in my backyard in 2019, I had a mix of emotions. I was excited, but I was actually pissed because I thought to myself … I talked to so many realtors on a given week and how is it that no realtor had ever mentioned real estate investing to me? I thought to myself, I thought back to the first house I had bought in 2009 and the second house I bought in 2018, and I’m like, “Wait a minute, how come those two realtors didn’t ask me if I was interested … my husband and I, why didn’t they ask us if we would like to invest in real estate? Why didn’t all the realtors, I speak to on a weekly basis on all my coffee days at Starbucks selling closing gifts, why wasn’t this ever brought up? I just don’t understand.”
So there is the retail side of real estate and there’s the investment side of real estate. And I just think realtors, I think it’s a huge disservice to their clients to not bring this up the real estate, “Hey, would you like to build wealth through real estate investing?”

Tony J. Robinson:
Yeah, but I think the challenge there, Jenni, is that most real estate investors or most real estate agents are not investors themselves.

Jenni Vega:
Exactly.

Tony J. Robinson:
So if they’re not educated on that process, it’ll be difficult for them to educate their clients, but something I want to go back to, just you talking about what you were doing or I guess even what you’re still doing right now, if you can tell people what Cutco is, and also like you said, for a lot of people their goal is I want to get out of my W-2 as fast as humanly possible. It seems like you’ve taken a slightly different approach where you’ve built this healthy W-2 income. So I guess what is Cutco and then why are you not as eager, do you think, as others to walk away from your day job?

Jenni Vega:
Yeah, yeah. Actually I’m not W-2, I’m 1099.

Tony J. Robinson:
Right.

Jenni Vega:
I’m not eager to walk away, for a lot of reasons. One, I really truly enjoy what I do. I’m doing this for a long time. Also, when you’re a real estate investor, you need to have income. If you want to buy properties, you can only buy, I think it’s maybe 10 properties or something like that with traditional financing before you have to look into DSCR loans and other financing which have higher interest rates. So we’ve been fortunate in that when we do buy property, we’ve never had a hard time because we’re able to show a pretty healthy income. I also know, short term rental, it might be a little up and down. We’ve been very fortunate that we’ve been very consistent with all of our properties, but I like having that safety net of my two-day jobs or day of businesses if you want to call them that. Because I am self-employed technically, but my income is pretty stable.

Tony J. Robinson:
There’s a lot of benefits too from having that healthy kind of 1099, W-2 income, whatever it is, but Cutco specifically, there’s a guy, his name is Justin Donald.

Jenni Vega:
Yeah, I know Justin.

Tony J. Robinson:
Yeah, he runs the Lifestyle Investor and he talked about the incredible alumni that have come from Cutco and like multi, multi-million. I think even one of them was a billionaire guy that started off working at Cutco. So just really quickly, not to get too off track here, but what were some of the things that you liked, or I don’t know, what are some of the skills you developed working at Cutco? Because it seems like there’s just a consistent number of people who come out of that company, just extremely successful.

Jenni Vega:
Yeah, so definitely you have to make it happen. Nothing comes to you. It’s really like what you create people skills, lots of phone calls. So reaching out to people. When I actually started with Cutco, I was a miserable failure and I was one of the worst sales reps in my office of 50 people. And I struggled a lot, but I decided when I started with Cutco that I was going to make it work and I was going to hit the top promotion no matter what it took. And I didn’t have any skill and I actually still with short-term rental. I am not the smartest cookie out there. I’m in a mastermind group with about 15 people across the country called Faster, huge shout out actually to Madeleine Blowe. She’s awesome. She’s our leader.
And I’m constantly asking, people probably laugh at me in our group because I’m asking the dumbest questions, but with real estate investing, you just have to decide that you’re going to do it and there’s no ifs, ands or buts and you’re just doing it. So when I started Cutco and when I started Real Producer, the magazine I run, you make that decision and you just say there’s no ifs, ands, or buts. You go into it knowing that it’s going to be really hard, but you’re just going to do it. And that’s like the end of the story. It’s more important to have mindset than skill because you can get the skill and you can get the training and listen to a podcast, but you just have to have the tenacity.
So with real estate, when we bought that first property in Milwaukee, we were extremely scared and extremely nervous, but I actually reached out to a realtor from the BiggerPockets forum, Marcus Auerbach in Milwaukee, and that relationship with him and having a realtor that was an investor himself and part of the BiggerPockets community, that was paramount to our success. So it’s like the who not how with real estate investing, masterminds the right realtors that come alongside you, the right lenders and making the right decisions is the key to success, not necessarily skill.

Rob:
Yeah, I think that’s the right mindset to have and honestly, I really can appreciate you coming on here and saying, well first giving us numbers about how well you do at your Cutco job, but it’s also pretty amazing that you still want to do that, and I think this is a mistake that a lot of people get into is they might make six figures at their job and they’re like, “Yeah, yeah, as soon as I make that in real estate I’m going to quit,” but it’s sort of like, why would you, right? Because you’re not just replacing your income, you need the extra income to keep investing into your portfolio. So I think the way you’re doing it is the best way because effectively your job is supercharging your portfolio in 10, 15, 20 years from now.
You’re going to have a giant portfolio that can help you retire. So I think that’s a great way to do it. You told us a little bit about this book that you read, Hold and kind of sparked this whole, why didn’t anybody tell me about real estate after reading Hold and now that you have the knowledge, what’s your motivation and what’s your why?

Jenni Vega:
So we have a four-year-old son and I know there’s other ways to build wealth and there’s like syndications and there’s multifamily and there’s other ways to do this. What excites us is to one day when we pass on, to leave him a bunch of cool properties that are going to be paid off. What I really like about the Hold book is just the whole … using other people’s money to pay down debt. And that’s why I really like single family real estate investing, even though … let’s just say worst case scenario, even if you’re breaking even, still other people are still paying down your debt. We actually didn’t intentionally set out to create this, but now our portfolio does happen to consist of some pretty cool properties across the country.
So it is cool one day for him, maybe he will tell his friends, “Oh, I own a beach property, I own mountain properties, I have a desert property and I have a lake property in Wisconsin, and that is kind of cool to think about.”

Rob:
So Jenni, you told us about your first short-term rental in Milwaukee. Tell us a little bit about some of the short-term rental rules that you broke with this property.

Jenni Vega:
So the Milwaukee property was our first one, and I guess the rule that was broke is we actually bought this property in a B minus C neighborhood because we were limited with what we could afford. I still would say it was in a golden triangle by my definition because it was five minutes to one of the biggest hospitals in town. It was eight minutes to the airport and eight minutes to downtown, and it was on a really nice street. So it actually worked out, and what’s interesting is to date, it’s our highest rate of property.

Tony J. Robinson:
Yeah, I mean let’s talk about that for a bit, Jenni, because I think that’s an important topic that your ability to get highly rated as an Airbnb host, a lot of it depends on your property and your ability to be a good host, but a lot of it also depends on the expectations of your guest, and if your guest is planning their once a year vacation with their spouse and their kids, maybe even their grandchildren, and this is the one time a year where the entire family gets together, their expectations of your property and the location are going to be pretty high because this is that one time a year, maybe they took time off of work, they cash in some vacation time.
If your guest is traveling for a week offsite working somewhere else and all they’re doing is going back to that apartment after dark and grabbing some takeout, eating, going to sleep and waking up and doing that all over again, their expectation of your property is going to be completely different. So I think the traveler profile of your chosen market plays a huge role in your ability to get, I think, better reviews.

Jenni Vega:
Exactly, yes. So again, no one is really coming here to vacation. They’re coming here because they’re working here. They might be going to a wedding. We get some bachelorette parties. There are some festivals in the summertime and the price is right too. We sleep 10 people, but it’s a really good price and the guest’s expectations are definitely met as well. So we’ve almost never had a less than five star review ever at this property.

Tony J. Robinson:
Great.

Jenni Vega:
Yeah.

Tony J. Robinson:
Awesome.

Jenni Vega:
It’s really interesting. So when you even compare that to our amazing storybook cabin that we have in this Smokies, we have a lake property in Wisconsin too that’s spectacular. We get more four star reviews there than we do in my Milwaukee property, which is very interesting.

Tony J. Robinson:
Rob, so we talk a little bit about breaking rules in the Airbnb short-term rental industry. Have you broken any rules recently that have worked in your favor? Because I can think of a rule that I broke that did not work in my favor, but I’m curious what’s happened for you recently?

Rob:
Yeah, so I think beds are overrated, so I stopped putting them in my short term rental. No, I’m just kidding.

Tony J. Robinson:
Who needs beds?

Rob:
So I think for me, the biggest rule I ever broke was just being sort of a pioneer in a market that didn’t necessarily have comps. Now there are a lot of comps because I opened my mouth on YouTube, but I often will just throw a dart out there, hope it lands, and just hope that it books with the research knowing that the traffic goes through and the market is underserved, and that’s a really scary thing. It’s a really, really scary thing, not just when you’re investing with your money, but when you’re investing with an investor’s money, it really changes your parameters because you can’t look an investor in the eye and say, “Hey, there are no comps. I think it’s going to work.”
You have to be a little bit more conservative when you’re partnering up or working with someone else’s money. Whereas when I just do my own things, I like to experiment and I like to just buy stuff. That’s why I’m in so many markets. I like buying stuff in different markets and sure, I might be the only one in that market, but at least, it tells me that my hunches are correct, and I just like having a little bit of confirmation to know if you set up a really nice awesome amazing short term rental, will the people come to it? And I think the answer is most of the time, yes. What about you?

Tony J. Robinson:
Well, Rob, you bring up a really good point man, and honestly, both you and Jenni are far braver and more courageous than I am because typically, we don’t go into a market if we don’t see at least triple digits when it comes to the number of listings in that city. I’m too afraid to be number four, like you mentioned you were, Jenni because like you said Rob, it is hard to really comp and kind of understand, I don’t know, I guess is it actually going to work? So I usually … I don’t want to be the pioneer in a market. I want to see some proven people go before me and then, I just want to go in and do my best to outperform them.

Rob:
Yeah, yeah. So Jenni, so you mentioned, you told us about this Milwaukee property and you told us that one of the rules you broke was buying a beer or in a C class neighborhood. Now, I know that some of the other parameters that you’ve set when you’re buying your properties as investing in the golden triangle, can you tell us a little bit about what that is?

Jenni Vega:
Yeah, So just making sure that there’s … in that area, you’re close to a couple hotspots, so for that particular city, it was really close to a major regional hospital, really close to the airport and really close to downtown.

Rob:
It’s a sort of being in the middle of a culmination of things, right?

Jenni Vega:
Exactly. Yeah.

Rob:
In between traffic. Yeah, this is something that I talk about a lot. I like being in between two major hubs. Triangle is even better if you can be in the middle of three, but this is a reason why one of my properties works is because it is outside of three major cities and you sort of have to drive through it to get to those other cities. So sometimes I think secluded and being out there, and a little bit outside of the metropolitan areas is okay when you know that people are sort of a captive audience on their travels, they have to go through your city to make it to the other destination, right? So, you can be that pit stop for them. I would say an example of this would be in between Austin and Dallas, there’s Waco.
Waco is a very popular spot. Chip and Joanna Gaines have made it popular and it’s like the mid midway point in between. So, I’ve always said that’s a really great rental market because people stopping in.

Jenni Vega:
Yeah. Exactly.

Tony J. Robinson:
Me ask one follow up question. Since both of you’re such pioneering trailblazers here, what do you guys need to see to make you feel comfortable to invest in some of these further out markets? If I’m far enough, can I just throw in enough hot tubs and game rooms and all these cool amenities to make up for it or is there something else that you’re looking for outside of what you guys just said to really make you feel confident?

Jenni Vega:
One thing I look for my buy box is I’m trying to look for homes under 400,000 that are going to gross 100,000. So going on price labs, market dashboards, and seeing … in that immediate area, seeing if homes are doing that. It doesn’t always have to be exactly that but that’s ideally what I’m looking for. I really look for the overall home price is what I’m looking for or I’ve never spent more than 400 grand on a house.

Rob:
Okay. Yeah, and if you ever find any of those $400,000 homes that gross 100,000 and you decide not to buy it-

Tony J. Robinson:
Please send them my way.

Rob:
Please send them our way.

Jenni Vega:
Well, pretty much all my homes are in that ratio or similar to that ratio and not too far off from that or the projections are somewhat close to that. They don’t have to be spot on, but they’re in that ballpark or I don’t do it.

Rob:
I think for me to answer your question, Tony, I don’t think you can just over amenity and overly design a place to be bookable in some markets, right? If you’re out in the middle of nowhere, there’s still has to be a compelling reason for people to go. I think what I’m always looking for is, I don’t know, for example, a college town. There’s a lot of people in a college town and if I look on Airbnb and there’s only 10 short term rentals on there, and then those 10 short term rentals were … the photos were taken with a Blackberry, the first Blackberry that ever came out and then furnished with Goodwill Furniture, then, I get really excited about that because I’m like, “Wow, just one nice Airbnb can sort of scoop up the competition.” And so for that reason, you still have to be within reason.
I don’t think you can just buy a place in the middle of Kansas where the nearest city is three hours away and expect people to go, but I’ll give you an example of a place. Unfortunately, I did not end up closing on this property, but I was in escrow on this amazing dome home about 30 minutes south of Denver in Castle Rock, and I was so excited about it because it was a destination for people that live in Denver and that are going to the national park and stuff, they would be willing to drive 30 minutes out to get here, and it is in between two cities and it was super unique, had amazing views and I just thought for me that one really checked a lot of boxes. And at that one, I was going to do a lot of stuff, design hot tubs, game rooms, everything, because I knew that there was an immediate need in that market.
All of the Airbnbs out there were sort of travel destination type of Airbnbs, but they don’t really have any amenities and the views weren’t as good. So I’m getting sad talking about it because I did end up not closing on it, but to me, that one did check the box because it was so close to Denver.

Tony J. Robinson:
Yeah, I think it’s definitely a balance that you want to be able to strike, and that’s basically what both of you all have spoken to is how do you get close enough so that it’s not inconvenient for your guests to get to where they’re trying to go, but not so close that now you’re beating or breaking that ratio of being able to get 100K on a $400,000 purchase price, but I think one thing that does make it easier to be on the outskirts is not just the amenities, but also just kind of the uniqueness of your property. If you have something that’s really cool that people can’t really book somewhere else, it makes them more willing to make that drive.
So Jenni, I’m curious, you talked a little bit about having some of these unique properties. Can you walk us through, when you say unique, what does that mean? What do those property structures look like? What are you offering guests?

Jenni Vega:
Yeah, I actually want to ask you guys about this too. So it depends on the market and this is what I want to get your thoughts on. So take the Smokies for example. I have two properties there and one is this Hansel and Gretel style cabin, storybook cabin. Super cute. We don’t have a view. We are about 20 minutes from Pigeon Forge and Gatlinburg, but it’s very unique and very small, very cute, but very … has very antique feel, guests feel like they walk into Snow White’s cabin. There really is truly no other … that I’ve seen no other cabin in the Smokies like it. So very rustic. A lot of cabins in the Smokies are going modern and it does very well. Then we had Leon’s across from that cabin that we just completed a build on back in February.
And I thought our build was pretty unique. I still think it’s pretty unique, like floor ceiling, windows has a really cool look to it. So we put this on Airbnb and then I look on Airbnb and I’m like, “Oh man, it appears that everyone in the Smokies has just also completed a new build.”

Tony J. Robinson:
Yeah.

Jenni Vega:
What are your thoughts on a market like the Smokies. It’s quote-unquote saturated, would you buy more property there in 2023? Would you advise anyone that you’re mentoring to buy more property there? What do you build there? What would you do in a build there to make it stand out? And I’m sure you get this question a lot, so what is your take on that? And also how do you make your properties stand out in markets like that? In markets like Joshua Tree, in those sort of markets? I’m not talking about … I have properties too in Central Wisconsin where the masses are not flocking to, but in a place. The Smokies where you both own property in what’s your take on that?

Rob:
Tony you go first.

Tony J. Robinson:
Yeah. There’s a lot of layers to this. I think the first part that I’ll answer is on, okay, does it still make sense to kind of buy in a market like the Smokies that’s quote-unquote unsaturated or that’s oversaturated. Just really quick on the whole saturation piece, and I know Rob, you talked about this before too, that I think people throw around the word saturation kind of too loosely. There was a big fire in the Smokies back in 2016 and even in 2023, we’re still not up to the number of cabins that were present in that market in 2016. So demand has continued to increase in the Smoky Mountains, but supply still isn’t where it was back in 2016. So I think we probably have some ways before we can call that market saturated.
I do think that we’ve seen in the last 24 months a big run-up on prices in that market, and I think that’s where the challenges come. My cabin, the first cabin that I bought during COVID, it’s doubled in value, but our revenue has not doubled, right? So what does that mean? It means if I’m paying double the amount of money for the same amount of revenue, I just cut my return in half

Rob:
At a 7% interest rate.

Tony J. Robinson:
At a 7% interest rate, right? So I think that’s where the challenges are in that market where you’ve seen revenue kind of stay steady, which is, it’s strong revenue in that market. If you buy a cap in there, you’re probably going to do well from a revenue standpoint, but it’s how do I get my purchase price low enough or my interest rate low enough for it still to make sense? So I think that’s the bigger challenge in that market. However, if I was going into a market where there’s heavy competition, I think your ability to compete … first, it comes down to your ability to buy, right? You want to make sure that you’re not overpaying in that market, that you’re getting a good deal, but second it comes down to your ability to give the guests something that they’re not able to get at other properties.
So I’ll give you an example for our properties in Joshua Tree, a lot of people say that Joshua Tree is oversaturated and “Hey, I shouldn’t go buy in this market.” It is true that supply has increased, but if you’re a professional host, that’s what you expect to happen and it’s on you to try and identify ways to increase your revenue. So what we did at one of our properties in Joshua Tree, we took our garage, which was just … it was locked to guest and we just had our washer and dryer inside of the garage. And Sarah, my wife and I, we had stayed at an Airbnb in Orlando and Orlando, if you want inspiration for really cool design and amenities, go to Orlando. And we stayed at this property that had this really cool Mario themed game room in the garage.
And we looked at Joshua Tree and like, “Man, there’s not a lot of properties that have cool game rooms in Joshua Tree.” Most of them are like … there’s like yoga studios and maybe a Peloton or maybe a pool table, but to do something really, really cool just wasn’t happening out there at a high level. So we took one of our garages, we spent $12,000 to convert it into this really cool Mario theme game room, and as soon as we did that, our revenue skyrocketed for that property. So I think what you want to identify in whatever market you’re in is what is the experience that’s missing here? What’s something that I’ve seen work well in other markets that isn’t present where I’m at right now?
Last example for Joshua Tree, and I convinced Rob after months and months of trying to get him to do this, but was like hot tubs. Initially in Joshua Tree, hot tubs weren’t a big thing and then, I’d say like 2021, you start to see more properties doing that, and now, it’s almost like par for course if you want to compete in Joshua Tree. So I think that’s my approach. That was a mouthful. Rob, I’ll shut up, man. What do you think?

Rob:
I agree with all of that. Next. No, just kidding. Yeah, so Smoky Mountains is a love-hate relationship. I think that there’s a run-up in prices with high interest rates. It makes it tough to get the good old days of 93% cash on cash returns. I got a property out there, I actually think it was probably a 95%. I think we got all of our money back in that first year, pretty close anyway. We would not be able to replicate that today. I think it would still be a good return. I just think it’s probably a little bit more normalized in terms of, yeah, I just don’t think you can expect your initial down payment back in the first year if you’re doing a second home loan or anything like that. What I would say is I think that the Smoky Mountains is actually of excellent starter market simply because a lot of the houses for sale, I would say like 95% plus, if not more, already come fully furnished.
And because they’re fully furnished, it makes the job so much easier to get that up and running because you can buy the property, fly out there, change maybe some art, maybe change out a couch or an accent chair, maybe some linens, but for the most part, you can get a property up and running extremely quickly because you’re just optimizing what’s there versus having to figure out how to ship 15 to $25,000 worth of furniture to the Smoky Mountains where all the driveways are super steep, and the only way you can get a hold of furniture is by going to local store. It’s just so hard out there to set something up from scratch. So I think it’s a really great starter market for that reason.
I just think that maybe it’s a little bit … we’ve calibrated a little bit. Like you said, Tony, I think revenues are actually relatively consistent. Demand seems to be relatively consistent. So yeah, I wouldn’t say yes or no. I honestly haven’t even looked on Redfin in the Smoky Mountains particularly in the last year, because I just got tired of losing on every bid because everyone was bidding like 50 to $100,000 over and now, we’re seeing price cuts every single day. Now, I think maybe we’re starting to return to normal times again. Would you agree with that, Tony or am I off base?

Tony J. Robinson:
No, no. I totally agree with you, man. I think in a lot of these big vacation destination markets, our friend Avery Carl calls them Blue Chip Markets, the Destin’s, the Joshua Tree, the Smoky Mountains, the broken bows. You saw massive run-up in prices over the last two years, and I think we’re starting to see them kind of come back down to reality a little bit. Jenni, I’m curious for you, so you heard our perspective on it. So when you think about your own property, I guess what lessons did maybe you take away about your ability to try and compete in these markets that you’re in with the unique experiences at least?

Jenni Vega:
Yeah. Yeah. So my first two rentals just to be honest, are really not unique at all. They don’t really have to be because they’re not in the markets that are flooded. So the third rental was the Hansel and Gretel style and because it is the Smokies, we actually did acquire that fully furnished, but it wasn’t living up to its potential. It was furnished, but it really needed a little bit of sprucing up. So we took the base that was already there, and then we spent about three or four grand and we enhanced it a little bit more. So we really played up that more. So it doesn’t have any extra amenities that other cabins don’t have, but it has this old world rustic vibe, old wood green strove, this super like fairytale-esque look, whimsical look to it.
The new build across the road has … it’s not a tree house, but parts of it do have a tree house look, where you go upstairs, it has floor, wall, windows where you look outside and you’re kind of like in a tree house, big wraparound deck. It has a rustic meets modern look. We did not want to go to modern, but we didn’t want to go to rustic. We wanted to have a Smokies look with a little bit of modern and then, we have another property near the Grand Canyon where we actually built a little custom golf course, but we actually had a really bad experience with our contractor and he made the golf course look really bad. It looks kind of homemade hodgepodge, not really well put together.
So what we did in our listing is we actually embraced that and we kind of made fun of it, and we called it the redneck golf course because we know that it looks bad, and we had some people look at that and say, “Oh my gosh, you have to get rid of it.” We’re like, “No, we’re not getting rid of this.” Let’s just embrace it. Let’s make fun of it and guests love it.

Rob:
Okay. Cool. Yeah. Yeah, I love it.

Tony J. Robinson:
That’s so smart. It’s like, let’s just purposely do things really poorly and inexpensively and then, we’ll call it the bootleggers version of whatever it is. That’s super smart-

Rob:
Now, and this is what we call marketing, and you are an expert marketer. Congratulations.

Jenni Vega:
Well, I am a veteran salesperson, but actually, and what’s funny is a week ago and then … so actually, if I can plug someone else, I actually pay someone. Her name is Kate Chelyn. She’s amazing. She is an Airbnb listing optimizer, and I just hired her for two of my properties and a few weeks ago, she goes, “Jenni, are you doing lifestyle photos for your properties?” And I’m like, what the heck is a lifestyle photo? I never heard of such a thing. So what she’s recommending is that you hire a model to go to your properties and kind of take these cool pictures where the picture isn’t about them, but they’re enjoying your property. So we went up to my Grand Canyon property and we had a model set, but they had canceled day of.
Well, there is no one else to be in the picture, so my four-year-old and I, and my husband, we went up there and we had to be in the picture. So we went on the redneck golf course, me and my four-year-old, and the photographer got a picture of my son playing on the golf course, and I was in a distant background, you could barely see me, which is the point of it. So now we have pictures of our listing with my son on the redneck golf course. So on the Airbnb listing, the caption is cheer on your kids who widely play on the redneck golf course. And so we kind of embrace it even more, and it actually fits our listing because that’s a … speaking of breaking the rules, that listing is a manufactured home remodeled.

Rob:
Okay.

Jenni Vega:
People told me not to do that, but the numbers work, and the guests absolutely love it. And no one has ever said in their review, “Oh my gosh, it was a manufactured home. It was a trailer.” People don’t even know their state of the trailer, but it does kind of fit. It’s a rural kind of farm redneck golf. Those totally fits and people love it.

Rob:
That’s cool. Yeah. I’ve often considered asking Tony Robinson to come and model for all of my Airbnbs, so I’ll take that tip and convince him to do that. I’m actually building a mini golf course in one of my properties too, so I’m glad to hear that you’ve gotten good traction from it. I’m going a little extra with it and it will be a full on … well, man, to be honest, you got me a little scared because I’m like, I’m pretty sure my contractor’s going to pull this off, but now I’m like, what if he doesn’t, because it is somewhat more complex than it needs to be, but I don’t think that there are really a lot of mini golf courses out there, and I think that’s just a really cool amenity. Yeah, that’s cool. I’ve never thought about the lifestyle photos either.

Jenni Vega:
Yeah.

Rob:
I’ve considered it, but I just don’t know anyone that’s done it and it’s sounds like it’s working for you, right?

Jenni Vega:
So one helpful hint too for any listeners, apparently there are lifestyle photographers out there. They’re extraordinarily expensive, so we just found a local photographer, a photographer that just like they take wedding photos, graduation photos, and he actually offered to bring them model himself. So that would be probably the easiest way to find the right photographer for this. So not a listing photographer, just a people photographer. Then, a couple other listings, what we did to make them stand out, we bought an off-market house in Florida. We bought this house and there’s … apparently, what we learned about this market is in Panama City Beach, you have to have a pool, apparently. No one told me that.
We can’t put a pool in because of our yard. We’re on septic, so we are getting a cowboy pool, and we know that it’s not ideal, but it is what it is. So we’re going to do mini golf with the cowboy pool, and then we also turn our garage at that house into a really cool game room and then, we have another property in Central Wisconsin, and we converted that garage into a game room, and then we made our yard at that property at night. It turns into this whimsical, almost like fairy land. We have solar lighting everywhere, hot tub, all that. So those are some ways that we kind of make our properties stand out and moving forward, I really liked themed Airbnbs. I think that’s a really smart idea too.

Rob:
Did you add all of those different amenities after the Airbnb had been running or did you launch with those amenities?

Jenni Vega:
Yeah, so for the Central Wisconsin one, we did add that a few months after the game room and the hot tub, and we did see a pretty big difference in bookings. Yeah.

Rob:
Really? Okay. Do you have any … the redneck mini golf or whatever that you didn’t launch with that either, right?

Jenni Vega:
I did launch with that, yes.

Rob:
You did launch with that one. Okay. Then, was there another property that you added the … I guess the Panama City Beach, did you add the cowboy pool, which is basically one of those horse troughs that are above ground. They’re relatively small. They can be big.

Jenni Vega:
Yeah.

Rob:
Pretty cost and effective, I’d say, but did you launch with that as well?

Jenni Vega:
Yeah, we’re adding that next week, but we already started marketing that we were going to add it. So we put a picture of what it’s going to look like. And we did see a pretty big difference in bookings once we added that we’re going to have it, and that one, it’s actually pretty big. There’s a company called Gypsy Pools in Florida that provides it, and they have four different sizes, so hopefully it might attract more people with toddlers.

Rob:
Yeah.

Jenni Vega:
That’s okay.

Rob:
Cool. Yeah, I don’t know if you know this Tony, but I just added a pickleball court to my Scottsdale property.

Tony J. Robinson:
Dude, you’ve been talking about that for a while, man.

Rob:
I know. I know. I finally convinced David to let me do it. Okay, so it increased the revenue for June so far, 25% from last year. Then, yeah, we already booked so much more money, I would say so much faster. Last year, it just didn’t launch as fast as we thought. It did fine, but now, the bookings are rolling in, like every single booking basically … every single weekend is going to be booked for us forever and then, we just found this other website called Swimply, where you can rent out your pool, but they just added pickleball courts to the actual amenities that you can rent out individually outside of Airbnb. So we’re going to try to actually rent out our pickleball court for a $100 an hour during the weekdays, and then we’ll have pretty massive like $2,000 a night bookings for our week, like Friday through Sunday basically.

Tony J. Robinson:
Dude. Congrats on the pickleball court. Like you said, it has a measurable impact on revenue, on profitability. So I guess that leads into my next question, Jenni. In terms of your portfolio, when you look at what you’ve seen so far, what do your numbers look like? Give us the nitty-gritty on what kind of revenue we can expect to generate with the portfolio like yours.

Jenni Vega:
Yeah, so Milwaukee grosses about 40 to 50,000 a year. Keep in mind, I think most short term rental investors would say their net is about half of their gross. That’s pretty typical. So that’s Milwaukee. I should say though, had we spent a little bit more, there are properties that will gross like a hundred thousand a year there. The right property is a five bedroom downtown, those types of things. That I think can be achieved in, like I said, any Midwestern city. Then we, the Central Oklahoma one. Again, that was 92,000 purchase price, 39,000 gross last year. The third property was storybook on the hill in the Smokies, and that’s about 20 minutes from Gatlinburg and 20 minutes from Pigeon Forge that was purchased for 350,000 and it came with an extra lot. So that was a goodbye. That was in 2021.
That grossed 78,000 last year. Then, the new build all in, across the road, that was launched last February, that with furniture, with landscaping, with my $10,000 kitchen that I had to get with all the extras, the build was 371,000 but with all the extras, it was 450 out the door. That is projected to … I’m hoping that’s going to gross 90,000 in 2023. We might get to 100,000 maybe, so maybe I say in the 90s is my best guess for that one. Then, the fourth property was Grand Canyon, I think that was number four. We remodeled this 1984 trailer. This all with the remodel, I believe was about 280, so 280 all in and 12 month cycle, 50 to 60,000. Then, Panama City, Florida, we just bought and launched it in April. We bought it because we found this through a wholesaler and it was $100,000 under value.
So it’s worth 425. We bought it for 290, and then we put like 25,000 into it to rehab it. So a little over 300,000, and we’re hoping that one grosses like 75,000. I’m missing something. I’m missing my favorite … well, one of my favorite properties is our Central Wisconsin resort property out in the country. So this one was 371,000 before furniture and everything, and this one grosses a little over 100,000. So this is my golden standard property, and any featured properties, I would want to have more look like this property that we have there.

Tony J. Robinson:
That’s pretty good. So ballpark, you’re going to do about 530, maybe 550, depending on where you’re at in that range. Like you said, if you’re holding an expense ratio about 50%, you’ll net a little over 250,000 bucks, which is pretty good, especially for that number of properties. So I guess it’s a really good return, I think, for the cash you put into the business. So I’m curious Jenni, what, if anything, would you … looking back now, say you were starting over today, what, if anything, would you have done differently as you built out this portfolio?

Jenni Vega:
I would’ve bought a little bit less and done more properties like my favorite, the one in Central Wisconsin. There’s nothing special about this area. It’s a little bit bigger. We sleep, eight people. It’s just, I think working smarter, not harder. Again, I really like the Midwest.

Tony J. Robinson:
Yeah. It’s a great market.

Jenni Vega:
It’s not talked about a lot in the short term rental space, and you can get cheaper properties,

Rob:
Don’t tell people.

Tony J. Robinson:
Yeah.

Jenni Vega:
I heard a lot of good things about the Northeast, like Pennsylvania, kind of those areas too. Ohio, lots of good stuff in Ohio, places like that, because you can get big, nice properties for, in the 200s, 300s and this particular property, we’re not in a big city like Milwaukee. So we don’t deal with crazy property tax. I would’ve probably … if I had to do it over again, I would have probably just stuck to bigger luxury properties and probably less, maybe three to five luxury properties that will gross a 100,000 a year. That would be my recommendation, definitely. I think when we started, for some reason, I think some investors think it’s a game of how many, like three, five, 10, whatever. It’s not a game of how many. It is not like a race. You don’t get a prize because you have how many. It should be quality, not quantity.

Rob:
100% agree. Tell us. I mean, it seems like you’ve sort of figured this thing out, what would you say some of the keys to success are for the people that are getting into the Airbnb in short term rental game in 2023, and why are they different from what people think?

Jenni Vega:
Well, I’ve absolutely not figured this out. I’m still figuring this out.

Rob:
I think you’re pretty close though.

Tony J. Robinson:
Yeah.

Jenni Vega:
Thanks Rob. Some of the keys to success are joining mastermind groups, having friends in the space, that can be pretty lonely and actually, your friends that are not doing this will not understand you. Not everyone is going to be super happy for you and super thrilled for you. It’s really going to be important to form friendships with other investors. That’s going to be really key. Other big tips would be to really think about what you want the end to look like. A couple of years ago, we just took things that were thrown at us and came at us that we didn’t really think enough about what is the end goal here. If we would’ve thought more about that, we would probably have three or four luxury properties like our lake property in Wisconsin.
And just done things a little bit more strategically and a little bit smarter. So really, I would say anyone starting this journey or even if you’re a little bit a year in or two years in, or no matter how experienced you are, I would recommend taking a step back and just ask yourself a year from now, five or 10 years from now, where do I really want to be at? What is my strategy? And say no more often, and just realize that when you say no to things, you’re actually saying yes to something else.

Rob:
Yeah, that’s great. So have a vision for five to 10 years, find a community, find a mentor in this space, and then one that you didn’t list, but is obviously just a really great recurring theme of the episode, break the rules. I think that’s one that people should really digest because I think breaking the rules when it comes down to it just means taking a bet on yourself that you can get through whatever rules you’re breaking in that is going to be a successful result. So I appreciate you sharing all that to. Tony, anything else? Did I miss anything? I mean, I feel like we can both probably take a page out of Jenni’s book here.

Tony J. Robinson:
Yeah.

Rob:
You have taught us.

Tony J. Robinson:
No. Yeah, I mean, I’m going back and looking at my notes. I think the other thing too, Jenni and again, I don’t think you explicitly said this, but it’s giving yourself grace to make mistakes, because you said you made a lot of mistakes at the beginning, but you’re a better investor because of it. I think for a lot of people who are starting … and I’m putting up my rookie hat here, I think for a lot of people that are starting, part of what holds them back is that fear of just royally messing things up, but I think we all have to remember that in order to be great, you have to be good, and in order to be good, most people start off bad. In order to be bad, you at least got to try and you’ve got to go through those steps to really get to a point where you’re confident and you’re comfortable.
So I appreciate you sharing both the highs, obviously, half a million bucks in revenue, but also the lows, the mistakes you made and how it made you a better investor.

Rob:
Yeah, totally.

Jenni Vega:
Well, thanks for having me. It was such an honor.

Rob:
Yeah, of course. Well, tell us where can people find out more about you if they want to connect, if they want to find you on the socials, on the innerwebs, where can people reach out?

Jenni Vega:
So they can connect either right on BiggerPockets app and my username is jenniV1. So that’s my name with an I, capital V, the number one or on Instagram. My profile is jennivega_az. AZ stands for Arizona. And if you want to email me, you can reach me at Sharp Vega. Sharp, S-H-A-R-P, my full name, sharpjennivega@gmail.

Rob:
Awesome. Okay, and what about you Tony?

Tony J. Robinson:
Yeah, people can reach me on Instagram @tonyjrobinson. Also, obviously on the BiggerPockets Real Estate Rookie Podcast. We put out episodes every Wednesday and Saturday. And if you’re a rookie, looking to get started in the world of real estate investing, come hang out with me and my co-host Ashley Kehr on that side of things.

Rob:
Cool, and we will end, it’s a good … I mean, I’m waiting, waiting for the invite, but that’s okay. It is one of the best … it’s the top five for me. I listen to that one more than I think every other podcast. So thank you Tony for teaching me as well.

Tony J. Robinson:
I appreciate that.

Rob:
And you can find me over on robuilt on YouTube and on Instagram as well. And you can also find me on the Apple platform, where you can leave us a five star review. So please go and do that. We read all of them and we love your feedback and we love the five stars and it helps us get served up to new audience as well. So with that, thank you so much, Jenni. We appreciate you coming and sharing your knowledge with us and we’ll catch everyone on the next episode of BiggerPockets. This is Robert for Tony, “The Airbnb model” Abasolo out. I’m pretty sure I did that wrong, but it sounded cool in my head. Not only did I mess that up by saying Tony’s first name, but I added my last name to it. So yeah, it’s just what happens when David Greene is gone. Things go crazy. Bye everyone.